Question C2 You are considering to form an investment portfolio with the following two stocks: Stock S T Expected Return 14% 12% Standard Deviation 18% 14% Correlation coefficient between the two stocks is 0.38. Risk-free rate is 3%. Required: (a) Zero correlation represents no diversification effect. Do you agree? Explain. (4 marks) (b) Calculate the (1) expected return and (2) expected risk premium of the portfolio consisting of 65% in Stock S and 35% in Stock T. (2 marks) (c) Calculate the standard deviation of the minimum variance portfolio created by Stock S and Stock T. (6 marks) (d) Markowitz efficient frontier represents the upper left-hand boundary of the investment opportunities sets consisting of different combination of risky assets. Explain